Even though the FAA may issue a special flight permit (“SFP” or ferry permit) for an aircraft that does not meet applicable airworthiness requirements but is capable of safe flight, aircraft owners and pilots should be aware that some aircraft insurance policies do not provide any coverage when the insured aircraft is operated pursuant to a SFP.
Although coverage provided by an insurance policy depends on the terms of the specific insurance policy at issue, the need to closely examine your policy is demonstrated by a common scenario involving an aircraft overdue for its annual inspection, which the owner/pilot desires to reposition to another airport where the necessary maintenance can be performed.
As far as the FAA is concerned, the owner/pilot may apply for and obtain a SFP that will authorize the flight to take place in accordance with the SFP’s operating limitations. Under FAR 21.197, a special flight permit may be issued to an aircraft that may not currently meet applicable airworthiness requirements, such as being out of annual, but is still capable of safe flight, as determined by a certificated mechanic that places an entry in the aircraft’s records. Furthermore, the FAR recognizes several purposes for which a SFP may be issued, including “flying the aircraft to a base where repairs, alterations, or maintenance are to be performed, or to a point of storage.”
Despite the fact that the FAA has issued a SFP, some aircraft insurance policies will not cover any loss that may occur during the ferry flight. For example, a policy may state that “there is no coverage if the aircraft is operated under conditions requiring a SFP or any other type of waiver, even if the SFP or waiver has been granted by the FAA.” Some policies may also contain additional provisions excluding coverage when the aircraft is operated by an individual or organization for the purpose of performing maintenance.
Before taking these types of flights, be sure to call your insurance broker or carrier to advise them of what you will be doing with your aircraft. Understanding whether your aircraft insurance policy provides coverage for an intended operation is important, as courts often uphold an insurance carrier’s denial of a claim when the aviation insurance policy clearly did not provide coverage for the flight.